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Despite proof that a Visa vice president had written more than 400 Web site postings criticizing a startup Internet credit card clearing center, Visa’s lawyers, Michael Lynn and Jeffrey Tillotson of Dallas’ Lynn Tillotson & Pinker convinced a jury that their client had not defamed the company. THE CASE ZixIt Corp. v. Visa USA Inc., No. 99-10187-K (Dallas Co., Texas, Dist. Ct., 192d Judicial Dist.). Judge Merrill Hartman presided. MALICIOUS MESSAGES Between May and November 1999, as the Dallas-based ZixIt Corp. was trying to create positive investor buzz for a new kind of online credit card processing system, Visa executive Paul Guthrie embarked on a mission to undermine the new product. In contrast with Visa’s established protocols, ZixIt claimed that its new ZixCharge system would enable an Internet shopper to make purchases online without having to reveal his or her credit card number or other personal data to the vendor. From his San Francisco office, Guthrie, then the vice president for technology research and development, began posting messages on a Yahoo message board for ZixIt investors. He challenged the company’s claims and urged other investors to sell their ZixIt stock before it was too late. He posted 437 notes before being caught. In its complaint, ZixIt charged that Visa — using Guthrie as its agent — had engaged in a “malicious two-part scheme to disparage and interfere with ZixIt.” Suing Visa, but not Guthrie, the company alleged that one by one and as a body of work, Guthrie’s postings had defamed ZixIt. Visa was accused of having defamed ZixIt by dispatching its corporate representatives to put down ZixCharge when meeting with executives from Wachovia Bank, the credit card issuer MBNA, and other financial institutions. ZixIt also said that Visa tortiously interfered with its marketing efforts. It asked for $699 million in damages. WHITE NOISE Confronted with the 437 messages, Lynn and Tillotson needed to distance their client from its now former vice president, while convincing the jury that even if Guthrie had done these things as Visa’s agent, the postings were just the kind of rumor and speculation that surrounds publicly traded stocks. Visa had not fired Guthrie and, as the plaintiff’s counsel established at trial, allowed him to stay until he got another job. Lynn said that although Guthrie was reprimanded, Visa could not fire him because of First Amendment issues unique to California. “Paul Guthrie was both the key and the possible noose to our case. His testimony had the ability to both sink and save us,” Tillotson said. “I put him on the stand and sweated every moment of it.” Guthrie testified twice at the trial, once by videotape and then in person. “Guthrie was slaughtered,” Lynn said. “It wasn’t even a fair fight.” Describing Guthrie as “a geek,” and as somebody who is “still largely innocent of the ways of the world,” Lynn said that he “came across as somebody less than able to orchestrate a conspiracy. “The jurors concluded that he really was off in his own world,” Tillotson said. CAUSE AND EFFECT In addition to Guthrie’s testimony, another key to winning, Lynn said, was James McClave, Ph.D., a causation expert who did an “event study” matching Guthrie’s e-mail postings with movements of ZixIt’s stock the next business day. “He was the only one in the courtroom who studied the effect of the postings,” Lynn said. Using poster-sized charts and graphs, McClave was able to show that there was an almost equal number of days when the stock went up as went down after a Guthrie posting. And, Lynn noted, the stock’s activity was no different when Guthrie posted nothing. Tillotson took the tactic of attacking the postings head-on. ZixIt Vice President James Pritchett had testified that Guthrie’s notes contained 592 express lies. Tillotson said he spent an entire weekend during the trial combing through the messages and “pulled 20 I could embarrass him on.” Some of those statements were true, he said, while others were taken out of context. CORPORATE BLUES ZixIt also maintained that Visa had conspired with its constituent banks to shun the ZixCharge and continue to use Visa’s allegedly inferior protocols. “There’s a lot of distrust and mistrust of corporate leadership. People are inclined to believe conspiracy stories,” Lynn said. But “if there was a conspiracy, who was involved? None of their witnesses could tell me.” THE VERDICT After three weeks, the case went to the jury in the form of 13 allegedly defamatory postings, representing Guthrie’s entire body of work, together with what Tillotson called an aggregate “global slander” charge. The jury was also asked to consider whether other Visa execs had slandered the company or tortiously interfered with its prospective business relations when they met with their counterparts at Wachovia and MBNA. The panel deliberated for 2 1/2 days before exonerating Visa. The jurors found that Guthrie was not acting in the scope of his employment and that Visa had not defamed ZixIt or interfered with its business.

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